VITA: Retake Money from the Government to Give to the Poor

I’m a fan of the
VITA
program, in which the
IRS
trains volunteers like me to help low-income people fill out their tax forms.

The reason why I’m enthusiastic about working arm-in-arm with the tax
collector is that most of these low-income filers are filing for refunds, and
that if they fail to file — or fail to get help applying for the deductions
and credits to which they are legally entitled — they leave their money in the
government’s hands. And the way I see it, that’s a dangerous place to leave
your money.

Anyway, one of the drawbacks of relying on an army of quickly-trained
volunteers to help people navigate the notoriously labyrinthine tax code is
that they will frequently screw up.

This isn’t a good thing, even though the errors were usually beneficial to the
taxpayer:

In the sampling of hypothetical returns, taxpayers would have gotten a total
of $31,828 more than they should have.

In the few cases when taxpayers were deprived of benefits they should have
gotten, those taxpayers would have paid $4,411 more in taxes than necessary.

The taxpayer is the one who will be held responsible for the errors, not the
volunteer tax preparer (who is typically anonymous anyway). It is unlikely
that the
IRS would
bring down the hammer on someone for having had the bad luck of having been
assigned to a bumbling volunteer, but they will correct the forms and lower
the refund if they catch errors.

Any low-income filer who anticipated a big refund only to have that refund
chopped down by an
IRS
computer will be very disappointed, or worse if they’ve already made purchases
in expectation of the refund.

But I hope this news encourages more people to become volunteer tax preparers — if you’re worried you’ll make mistakes, well, consider that
par-for-the-course. And remember that even the
IRS’s
own employees make a lot of screw-ups. A couple of years ago, auditors gave a
similar test to
IRS tax
preparers and found that 19 of the 23
returns they examined were wrong, and another set of testers who called the
IRS help
line to ask tax questions got correct answers only
62% of the time.

Tax evasion ethics researcher Robert McGee has made two additional papers
available on-line:

The first of these is most notable for the response given to the following
statement:

Tax evasion would be ethical if I were a Jew living in Nazi Germany in
1940.

Asked to rate their response to this question on a scale of 1 (strongly agree)
to 7 (strongly disagree), the average response from the 107 Orthodox Jewish
undergraduates from New York who were surveyed was 3.12. That’s about smack
dab in the middle.

McGee notes that there is a strong bias against tax evasion in the literature
of Jewish religious ethics, for a number of reasons, which may be why this
group was one of the most disapproving of tax evasion of all those McGee has
surveyed (see The Picket
Line6 July 2006).

“This growing access to people who aren’t wealthy and are willing to pay a
$3,000 fee … to someone to help hide their assets offshore is getting to be a
huge problem,” says Sen. Carl
Levin, D-Mich.,
ranking minority member of the Senate Permanent Subcommittee on
Investigations, which in August released the
latest in a series of reports on potential offshore abuses. “Honest taxpayers
get socked with the bill” as tax avoiders transfer assets offshore, Levin
said.

That cost is high.

Although no precise estimates are possible, as much as $1.6 trillion in North
American wealth is likely held in offshore accounts, according to a
2005 report by the Tax Justice Network, an
international group opposed to tax avoidance.

Looks like Dave Ridley has signed on to Russell Kanning’s crusade to get
IRS
employees to reconsider the ethics of their line of work. Ridley went to the
Nashua, New Hampshire
IRS
offices and stood there, quietly, holding a sign that read
“Is it right to work for the
IRS?”

The IRS
employees summoned the police, who ordered Ridley out of the building after
he’d been there for about half-an-hour.

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